When Prime Minister Balendra Shah appointed Swarnim Wagle as finance minister in the last week of March, expectations were unusually high. Unlike many of his predecessors, Wagle assumed the office of the finance ministry with an extensive background in economic policymaking. A renowned economist, former Vice-chairperson of the National Planning Commission and head of one of Nepal’s leading economic think tanks, he was seen as the right man for the post, someone capable of translating economic theory into practical reforms.
Political circumstances were also in his favor. The Rastriya Swatantra Party (RSP)-led government commands a near two-thirds majority in the House of Representatives. This gives him enough power to amend laws and push through structural reforms that previous coalition governments struggled to implement.
As the government approaches four months in office, however, the optimism surrounding Wagle’s appointment is beginning to give way to tougher questions about delivery.
The finance minister recently completed his first 100 days in office. During the period, the ministry claimed to have implemented 87.2 percent of its 100-point action plan which focused heavily on economic, legal and governance reforms, ranging from improving the business climate and strengthening public financial management to introducing legal amendments aimed at stimulating investment.
However, most of those reform measures remain procedural as their impact has yet to be felt in the broader economy. One hundred days is far too short a period to judge any finance minister’s overall performance. Many policy interventions need months, or even years, to produce measurable outcomes. However, economic indicators during the government’s first four months provide little evidence that the economy is gaining momentum.
The economy continues to struggle with many of the same weaknesses the present government inherited. One glaring example of this is capital expenditure. With just two days in the fiscal year remaining, the government has been able to utilize only 45.56 percent of the capital budget. Failing to spend even half of the funds allocated for infrastructure and development projects reflects not only persistent bureaucratic bottlenecks but also weak implementation capacity within the state. For a government that came to power promising efficiency and better governance, the figures raise concerns about whether reforms are keeping pace with political ambitions.
The finance minister has also failed to boost private sector confidence. Business leaders have repeatedly raised concerns about an increasingly uncertain investment climate. The arrest of several prominent businesspeople based primarily on suspicion has unsettled many investors. They say such actions have created uncertainty at a time when confidence is already fragile. Several private sector bodies have urged the government to adopt a policy of “hear first, detain only after crime is proven” rather than making arrests outright based on preliminary reports.
Commercial banks are flush with liquidity and lending rates have fallen to their lowest levels in years. Under normal economic conditions, such an environment would stimulate borrowing and private investment. However, private sector credit growth remains slow.
The latest central bank data shows private sector credit expanded by 6.2 percent in the first 11 months of the current fiscal year, against a target of 12 percent set in the monetary policy.
The reluctance of businesses to borrow despite historically favorable financing conditions suggests the problem lies not with the availability of capital, but with confidence in the economic outlook. Businesses appear unwilling to commit to new investments amid uncertain demand and policy direction.
Inflation has also begun moving upward. High inflation is adding another layer of pressure on households already grappling with rising living costs. While average consumer inflation stood at 2.89 percent during the first 11 months of 2025/26, the year-on-year inflation rate accelerated to 5.22 percent in the latest review month. Average inflation in the food and beverage category has increased to 4.95 percent with fruits, and ghee and edible oil prices rising in double digits.
With just two days in the fiscal year remaining, total revenue mobilization reached 81.33 percent of the targeted Rs 1,480bn on Tuesday. The government, failing to raise even Rs 1,300bn in the current fiscal year, has set an ambitious target of mobilizing Rs 1,600bn in the upcoming fiscal year. This raises questions about the realism of fiscal planning.
The capital market offers another measure of investor sentiment. When the RSP government assumed office, the benchmark Nepse index stood at around 2,950 points, with daily turnover hovering near Rs 13bn. Since then, however, the market has steadily weakened. The index has fallen below the 2,600-points level, while daily turnover has nearly halved.
Although stock prices are influenced by multiple domestic and international factors, the sustained decline reflects cautious investor sentiment and fading expectations that the new government would quickly revive economic activity.
External sector indicators also present a mixed picture. The external sector remained highly robust in the first 11 months of the current fiscal year, bolstered by surging remittances and record-high foreign exchange reserves. However, the economy faces contrasting realities, with a widening trade deficit, slow export growth and sluggish domestic production. Imports reached Rs 1,894bn over the first 11 months of 2025/26, while exports stood at Rs 277.97bn. This resulted in a trade deficit of more than Rs 1,600bn. While stronger imports may partly reflect improving domestic demand, the persistent imbalance reflects the economy's continuing dependence on foreign goods and remittance-driven consumption rather than productive domestic investment.
Political signals are also beginning to attract attention. In recent weeks, Prime Minister Balendra Shah has increasingly taken the lead in engaging representatives of the private sector. Shah has held a series of meetings with private sector leaders, and office-bearers of several commodity associations. However, Minister Wagle has remained absent from such meetings.
Whether this reflects a deliberate division of responsibilities within the government or an evolving shift in economic leadership is not clear now. However, this has prompted speculation among political and business circles about the finance minister’s influence within the administration.
